1976 (12) TMI 193 - SC - Indian Laws

Supreme Court ruling: Contracts binding, case remanded for liability determination.

Timblo Irmaos Ltd. Margo Versus Jorge Anibal Matos Sequeira

The Supreme Court allowed the appeal in part, holding that the second contract was binding and remanded the case to the Trial Court for determination of ... - Issues Involved:1. Authority of the attorney to bind the principal in contracts.2. Entitlement to demurrage due to delay in loading.3. Applicability and interpretation of Explanation (iv) to Section 21(1) of U.P. Act No. 13 of 1972.Detailed Analysis:1. Authority of the Attorney to Bind the Principal in Contracts:The primary issue was whether the second contract dated 5th February 1954 was covered by the authority conferred by the Sequeiras upon their attorney, Ramesh Jethalal Thakker (Thakker Junior). The Judicial Commissioner concentrated on the dictionary meaning of 'exploitation' used in the power of attorney, concluding that Thakker Junior could not have entered into an agreement for the sale of ore on behalf of Sequeira. However, the Supreme Court emphasized that the purpose of the power of attorney must be considered, and the terms should be interpreted in light of the facts and circumstances. The Court found that the power of attorney justified the meaning that it included the authority to conduct business and sales on behalf of the Sequeiras. The Court held that the second contract was legally binding on both sides.2. Entitlement to Demurrage Due to Delay in Loading:The second issue was whether the Sequeiras were liable to pay demurrage for the delay in loading. The Judicial Commissioner found that the delay was due to the plaintiff's failure to provide sufficient lighting and winches, and the appellant company did not open a Letter of Credit as promised. The Court concluded that the company had not discharged its obligations under the contract, and therefore, could not claim demurrage. The Court agreed with the Judicial Commissioner that the company was not entitled to demurrage as the delay was caused by the company's own breaches.3. Applicability and Interpretation of Explanation (iv) to Section 21(1) of U.P. Act No. 13 of 1972:In a separate judgment concerning a tenancy dispute, the issue was whether Explanation (iv) to Section 21(1) of U.P. Act No. 13 of 1972 applied. The High Court had allowed the landlady's writ petition, holding that once Explanation (iv) applied, the question of comparative hardship was irrelevant. The Supreme Court clarified that the word 'building' in the Explanation refers to a unit of accommodation, and the applicability of the Explanation depends on whether the rented premises and the landlord's occupied part constitute a single unit. The case was remanded to the District Court to decide based on this interpretation and to determine whether the omission of Explanation (iv) by U.P. Act No. 28 of 1976 affected the landlady's claim.Conclusion:The Supreme Court allowed the appeal in part, holding that the second contract was binding and remanding the case to the Trial Court for determination of liabilities, excluding the claim for demurrage. In the tenancy dispute, the case was remanded to the District Court to decide on the applicability of Explanation (iv) and the effect of its omission by subsequent legislation.